Harris, Mike P. -V- Pointe South Mountain Residential Association

1 Final agency action regarding decision below:

3 ALJFIN ALJ Decision final by statute

5 IN THE OFFICE OF ADMINISTRATIVE HEARINGS 6 MIKE P. HARRIS 7 No. 07F-H067017-BFS

8 Petitioner,

9 vs. ADMINISTRATIVE LAW JUDGE 10 DECISION POINTE SOUTH MOUNTAIN 11 RESIDENTIAL ASSOCIATION 12 Respondent. 13

16 HEARING: March 12, 2007 and March 28, 2007. 17 APPEARANCES: Mike P. Harris appeared personally. The Pointe South 18 Mountain Residential Association was represented by its attorneys, Lynn M. Krupnik, Esq. and Kristina L. Pywowarczuk, Esq. 19 ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully 20 ______21 Based upon the evidence of record, the Administrative Law Judge makes the 22 following Findings of Fact, Conclusions of Law and Order: 23

24 FINDINGS OF FACT 25

26 1. Mike P. Harris (“Petitioner”) is the owner of a residence located within The Pointe 27 South Mountain Residential Association (“Respondent”) in Phoenix, Arizona. 28 2. Petitioner also served as a director, but not an officer, of Respondent’s board of 29 directors for several years. 30 3. Respondent is managed by City Property Management Company (“CPMC”).

Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826 4. Members of Respondent are governed by The Pointe South Mountain 1 Residential Association Restated Declaration of Homeowner of Homeowner 2 Benefits and Assurances dated 10/1/04 (“CC&RS”) and The Point South 3 Mountain Residential Association Amended Bylaws as of 10/21/92 (“Bylaws”). 4 5. The Arizona Department of Building, Fire and Life Safety (“Department”) is 5 authorized by statute to process petitions from condominium or planned 6 community associations and its members for violations of applicable contractual 7 documents and/or statues. Such petitions are then forwarded to the Office of 8 Administrative Hearings, an independent agency, for formal evidentiary hearings. 9 6. On or about December 21, 2006, Petitioner filed a written Petition against 10 Respondent with the Department, the terms of which are incorporated herein by 11 reference. The Petition contains 20 allegations of wrongdoing by Respondent, 12 with multiple subsets under most of the allegations. 13 7. The tribunal granted Respondent’s motion for summary judgment as to 14 Petitioner’s allegations number 7, 15, 18, and the first bullet point of 20, which 15 reads: “Frank Frangul pushed Barry Smith out the door at the January 11, 2005 16 Board Meeting.” 17 8. Respondent was not required to provide Petitioner with a lawyer in this matter 18 under its Directors and Officers Liability insurance policy (“D&O insurance”). 19 9. Respondent did obtain proper D&O insurance. 20 10. Respondent’s president, Kay Hatch, did execute a Quit Claim Deed for Lot 1585 21 under the mistaken belief that the property was owned by Respondent. Once the 22 mistake was recognized, it was corrected. No damage was caused to the real 23 property owner. 24 11. On or about May 24, 2004, Respondent’s then treasurer, Dave Harp, made two 25 $25,000.00 investments with Respondent’s funds on its behalf. Mr. Harp is found 26 to have acted within the scope of his authority as Respondent’s corporate 27 treasurer to make such investments, which did not require Respondent’s board of 28 directors to approve. 29 12. Article 5.3.2 Suspension of the CC & RS reads as follows: 30

2 In [sic] any Owner shall be in arrears in the payment of any 1 amounts due under any of the provisions of this Declaration for a 2 period of fifteen days, or shall be in default in the performance of any of the terms of this Declaration for a period of fifteen days, that 3 Owner’s right to vote as a Member of the Association shall be 4 suspended automatically and shall remain suspended until all payments are made and defaults cured. 5

6 13. There are members of Respondent who own multiple lots. The Administrative 7 Law Judge finds that Article 5.3.2 applies to an owner of a specific lot. Therefore, 8 if the owner of multiple lots is suspended pursuant to that provision, the 9 suspension applies only to the specific lot in arrears but not to all lots owned by 10 such a member. A multiple property owner is not totally disenfranchised for 11 voting purposes for being in arrears for a specific lot. A multiple property owner 12 may still vote via their lots in good standing. 13 14. Petitioner was a candidate for Respondent’s board of directors in Respondent’s 14 2006 election. Petitioner lost the election. He claims that multiple owners of lots 15 with some in arrears were permitted to vote using the ballots for the lots not in 16 arrears. Petitioner also claims that certain delinquent ballots should have been 17 counted. 18 15. Respondent was not required to conduct a runoff election for the 2006 election. 19 The owners of all lots in good standing, including multiple owners with lots in 20 arrears which lots could not vote, were eligible to vote. Respondent improperly 21 determined that the owner of Lot 351 was delinquent at the time of the election 22 and did not count the owner’s ballot. After the first day of hearing, Respondent 23 determined that the owner had not been delinquent and was eligible to vote. 24 Respondent then opened the ballot, which reflected that the owner voted for 25 Frank Frangul and Les Meyers. The ballot for Lot 351 did not change the election 26 results. 27 16. Respondent is found to maintain Respondent’s common areas in a reasonable 28 manner.1 29 1 On the first day of hearing, Petitioner’s last witness was Blanch Prokes, a member of Respondent and a 30 property manager for another property management company, who testified on direct examination about Respondent’s maintenance of the common areas. The timing of Ms. Prokes’ testimony was determined 3 17. Respondent’s board did not fail to uphold their fiduciary duties relative to the 1 property management contract. Further, Respondent is not required to have a 2 comprehensive landscaping contract as alleged by Petitioner. 3 18. Respondent is found to have given proper notice of special board meeting as 4 required. 5 19. Petitioner failed to establish his right to record board meetings using a tape 6 recorder. Therefore, the board acted within its discretion to not permit Petitioner 7 to record such meetings, which are open to members but not to the public. 8 20. Petitioner failed to establish that Respondent was required to publish articles he 9 authored in its newsletter. While Petitioner may feel that his articles are helpful, 10 Respondent should be able to control the content of its newsletter. 11 21. Respondent’s property management company is found to have failed to timely 12 provide Petitioner with requested documents in December 2006. Petitioner was 13 provided with requested documentation in four days rather than the required 14 three days. Petitioner failed to establish any harm for the one day delay. 15

16 CONCLUSIONS OF LAW 17

19 1. A.R.S. § 41-2198.01 permits a member of a homeowners association to file a 20 petition against the association with the Department. That statute provides that 21 such petitions will be heard before the Office of Administrative Hearings. 22 2. Pursuant to A.A.C. R2-19-119(B), Petitioner has the burden of proof in this 23 matter. The standard of proof is preponderance of the evidence. A.A.C. R2-19- 24 119(A). 25

27 by Petitioner. Her direct testimony was concluded at approximately 4:55 p.m. Respondent’s lead counsel, Lynn M. Krupnik, Esq., indicated that she had prepared to cross-examine Ms. Prokes, but due to the late 28 hour, the length of time needed to conduct her cross-examination of the witness and the need to pickup her daughter at daycare before 6:00 p.m., the tribunal continued the cross-examination of Ms. Prokes to 29 the second hearing date. Ms. Prokes indicated that she would attend. On the second day of hearing, Petitioner indicated that Ms. Prokes would not appear for cross-examination. Therefore, Ms. Prokes’ 30 direct examination was stricken from the record due to Respondent being unable to cross-examine her. The parties stipulated to the admission of photographic evidence taken by Ms. Prokes. 4 3. Respondent violated by provisions of Bylaws Section 2 by not properly and timely 1 counting the ballot for Lot 351, which did not affect the outcome of the 2006 2 board election. 3 4. Respondent violated the provisions of Bylaws Article IX by failing to allow 4 Petitioner to timely review the delinquency report used for the 2006 board 5 election. 6 5. The Administrative Law Judge concludes that Petitioner failed to sustain his 7 burden of proof on the remaining issues set forth in his Petition. 8 6. The Administrative Law Judge concludes that Petitioner is not the prevailing 9 party in this matter and that he is not entitled to reimbursement of his $550.00 10 filing fee paid to the Department from Respondent, pursuant to A.R.S. § 41- 11 2198.02(A). 12

13 ORDER 14

15 IT IS ORDERED that Respondent be admonished that it must assure that future 16 election ballots are properly counted so that no member eligible to vote is 17 disenfranchised, regardless of whether it will affect the outcome of the election, and 18 must assure that CPMC, or any successor property management company, timely 19 complies with Article IX of the Bylaws. 20

24 Done this day, April 17, 2007

25 ______26 Brian Brendan Tully Administrative Law Judge 27

2 Original transmitted by mail this ____ day of ______, 2007, to: 3

5 Robert Barger, Director 6 Department of Fire Building and Life Safety - H/C ATTN: Joyce Kesterman 7 1110 W. Washington, Suite 100 8 Phoenix, AZ 85007

9 Mike P. Harris

10 5027 E. La Mirada Way Phoenix, AZ 85044 11

12 Lynn M. Krupnik, Esq. Kristina L. Pywowarczuk, Esq. 13 Ekmark & Ekmart, LLC

14 6720 N. Scottsdale Rd., Ste. 261 Scottsdale, AZ 85253 15

16 By ______17